Fair Value Measurements (Tables)

3 Months Ended

Mar. 31, 2020

Estimated fair values as of the periods indicated are as follows:



	March 31, 2020				December 31, 2019
(In Thousands)	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Financial assets:
Level 1 inputs:
Cash, due from banks and deposits in other banks		$85,810		$85,810		$95,424		$95,424
Investment securities available for sale	77,085		77,085		75,456		75,456
Marketable equity securities	7,609		7,609		7,945		7,945

Level 2 inputs:
Investment securities available for sale	191,874		191,874		200,682		200,682
Investment in Federal Home Loan Bank stock	3,312		3,312		2,138		2,138
Accrued interest receivable	5,007		5,007		4,512		4,512
Interest rate swaps	8,028		8,028		2,950		2,950

Level 3 inputs:
Loans and loans held for sale	1,168,131		1,162,777		1,111,205		1,095,031
Purchased receivables, net	23,670		23,670		24,373		24,373
Interest rate lock commitments	3,188		3,188		810		810
Mortgage servicing rights	11,653		11,653		11,920		11,920
Commercial servicing rights	1,200		1,200		1,214		1,214

Financial liabilities:
Level 2 inputs:
Deposits		$1,395,492		$1,399,541		$1,372,351		$1,373,647
Borrowings	36,877		37,749		8,891		9,216
Accrued interest payable	67		67		23		23
Interest rate swaps	10,429		10,429		3,484		3,484
Retail interest rate contracts	2,760		2,760		71		71

Level 3 inputs:
Junior subordinated debentures	10,310		10,696		10,310		11,000

Schedule of Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following table sets forth the balances as of the periods indicated of assets and liabilities measured at fair value on a recurring basis:



(In Thousands)	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
March 31, 2020
Assets:
Available for sale securities
U.S. Treasury and government sponsored entities		$211,909		$58,097		$153,812		$—
Municipal securities	2,323		—		2,323		—
Corporate bonds	30,567		18,988		11,579		—
Collateralized loan obligations	24,160		—		24,160		—
Total available for sale securities		$268,959		$77,085		$191,874		$—
Marketable equity securities		$7,609		$7,609		$—		$—
Total marketable equity securities		$7,609		$7,609		$—		$—
Interest rate swaps		$8,028		$—		$8,028		$—
Interest rate lock commitments	3,188		—		—		3,188
Mortgage servicing rights	11,653		—		—		11,653
Commercial servicing rights	1,200		—		—		1,200
Total other assets		$24,069		$—		$8,028		$16,041
Liabilities:
Interest rate swaps		$10,429		$—		$10,429		$—
Retail interest rate contracts	2,760		—		2,760		—
Total other liabilities		$13,189		$—		$13,189		$—
December 31, 2019
Assets:
Available for sale securities
U.S. Treasury and government sponsored entities		$211,852		$57,480		$154,372		$—
Municipal securities	3,297		—		3,297		—
Corporate bonds	35,066		17,976		17,090		—
Collateralized loan obligations	25,923		—		25,923		—
Total available for sale securities		$276,138		$75,456		$200,682		$—
Marketable equity securities		$7,945		$7,945		$—		$—
Total marketable securities		$7,945		$7,945		$—		$—
Interest rate swaps		$2,950		$—		$2,950		$—
Interest rate lock commitments	810		—		—		810
Mortgage servicing rights	11,920		—		—		11,920
Commercial servicing rights	1,214		—		—		1,214
Total other assets		$16,894		$—		$2,950		$13,944
Liabilities:
Interest rate swaps		$3,484		$—		$3,484		$—
Retail interest rate contracts	71		—		71		—
Total other liabilities		$3,555		$—		$3,555		$—

Fair Value, Assets Measured on Recurring Basis

The following table provides a reconciliation of the assets and liabilities measured at fair value using significant unobservable inputs (Level 3) on a recurring basis during the three-month periods ended March 31, 2020 and 2019:



(In Thousands)	Beginning balance		Change included in earnings			Purchases and issuances		Sales and settlements			Ending balance		Net change in unrealized gains (losses) relating to items held at end of period
Three Months Ended March 31, 2020
Interest rate lock commitments		$810		($897	)		$7,507		($4,232	)		$3,188		$3,188
Mortgage servicing rights	11,920		(930		)	663		—			11,653		—
Commercial servicing rights	1,214		(21		)	7		—			1,200		—
Total		$13,944		($1,848	)		$8,177		($4,232	)		$16,041		$3,188
Three Months Ended March 31, 2019
Interest rate lock commitments		$978		($329	)		$3,096		($2,508	)		$1,237		$1,237
Mortgage servicing rights	10,821		(674		)	1,107		—			11,254		—
Commercial servicing rights	1,030		(23		)	40		—			1,047		—
Total		$12,829		($1,026	)		$4,243		($2,508	)		$13,538		$1,237

Fair Value, Assets Measured on Nonrecurring Basis

As of and for the periods ending March 31, 2020 and December 31, 2019, except for certain assets as shown in the following table, no impairment or valuation adjustment was recognized for assets recognized at fair value on a nonrecurring basis. For loans measured for impairment, the Company classifies fair value measurements using observable inputs, such as external appraisals, as Level 2 valuations in the fair value hierarchy, and unobservable inputs, such as in-house evaluations, as Level 3 valuations in the fair value hierarchy.



(In Thousands)	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
March 31, 2020
Loans measured for impairment		$4,988		$—		$—		$4,988
Total		$4,988		$—		$—		$4,988
December 31, 2019
Loans measured for impairment		$561		$—		$—		$561
Total		$561		$—		$—		$561

The following table presents the gains and (losses) resulting from nonrecurring fair value adjustments for the three-month periods ended March 31, 2020 and 2019:



	Three Months Ended March 31,
(In Thousands)	2020		2019
Loans measured for impairment		$665		$292
Total loss from nonrecurring measurements		$665		$292

Schedule of Valuation Assumptions

The following table provides a description of the valuation technique, unobservable input, and qualitative information about the unobservable inputs for the Company’s assets and liabilities classified as Level 3 and measured at fair value on a recurring and nonrecurring basis at March 31, 2020 and December 31, 2019:



Financial Instrument	Valuation Technique	Unobservable Input	Weighted Average Rate Range
March 31, 2020
Loans measured for impairment	In-house valuation of collateral	Discount rate	25% - 75%
Interest rate lock commitment	External pricing model	Pull through rate	88.76	%
Mortgage servicing rights	Discounted cash flow	Constant prepayment rate	9.68% - 12.23%
		Discount rate	8.25%
Commercial servicing rights	Discounted cash flow	Constant prepayment rate	7.64% - 15.67%
		Discount rate	11.70	%
December 31, 2019
Loans measured for impairment	In-house valuation of collateral	Discount rate	25	%
Interest rate lock commitment	External pricing model	Pull through rate	92.65	%
Mortgage servicing rights	Discounted cash flow	Constant prepayment rate	9.11% - 10.67%
		Discount rate	8.51% - 8.66%
Commercial servicing rights	Discounted cash flow	Constant prepayment rate	7.64% - 15.67%
		Discount rate	11.70	%